NHA vs. ca (GR No.

128064, March 1, 2004)

SECOND DIVISION
[G.R. No. 128064. March 4, 2004]

R.V. MARZAN FREIGHT, INC., petitioner, vs. COURT OF APPEALS and SHIELAS
MANUFACTURING, INC., respondents.
DECISION
CALLEJO, SR., J.:

This is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure
of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 49905 affirming
with modification the Decision[2] of the Regional Trial Court of Rizal, Pasig,
Branch 154, in Civil Case No. 61644.

THE FACTS

The petitioner RV Marzan Freight, Inc., owned and operated a customsbonded warehouse located at the Bachrach Corporation Building, where it
accepted all forms of goods and merchandise for storage and safekeeping.
Private respondent Shielas Manufacturing, Inc., on the other hand, was a
corporation organized and existing under Philippines laws, and engaged in
the garment business.

Philippine Fire and Marine Insurance Corporation (Philfire) issued Insurance

Policy No. F-8952/4358-HO dated December 11, 1989[3] in favor of the
petitioner, covering its warehouse as well as stocks in trade of every kind
and description usual to the warehouse operation of the Assured and/or other
interest that may appear during the currency of this policy whilst contained in
the building, known as BACHRACH CORP.

On April 12, 1989, raw materials consigned to the private respondent covered
by Invoice No. TG-89125[4] arrived in the Philippines from Keelung, Taiwan on
board the vessel SS World Lion V-302W owned by Sea-Land Service, Inc. from

its supplier, Tricon Enterprises Ltd. The materials were valued at

US$32,006.93.[5] The Bureau of Customs treated the raw materials as
subject to ordinary import taxes and were not immediately released to the
private respondent. Moreover, the consignee failed to file the requisite
import entry[6] and failed to claim the cargo.[7]

In a Letter[8] to the Office of the District Collector of the Bureau of Customs

dated July 24, 1989, Sea-Land Service Inc. authorized the petitioner to take
delivery of Container No. SEAU-462597 consigned to the private respondent
for stripping and safekeeping.

In a Letter[9] addressed to Bureau of Customs District Collector Emma M.

Rosqueta dated September 11, 1989, the International Container Terminal
Services, Inc. (ICTSI) requested for authority to clear the storage areas of
cargoes which have been abandoned by their owners or seized by the Bureau
of Customs. Included in the request was the cargo of the private
respondent. The District Collector of Customs initiated Abandonment
Proceedings No. 288-89 over the cargo. On September 29, 1989, the District
Collector issued a Notice[10] to the consignee of various overstaying cargo,
including that of the private respondent, giving them fifteen (15) days from
notice thereof to file entry of the cargoes without prejudice to the right of the
consignees to redeem articles pursuant to Section 1801 of the Tariff and
Customs Code within the prescribed period therein; otherwise, the cargoes
would be deemed abandoned and sold at public auction. As ordered, the
Notice of the Abandonment Proceedings was posted on the Bureaus bulletin
board on September 29, 1980.[11] No separate notice was sent to the private
respondent because per the ICTSIs records, the address of the consignee
was unknown.

Earlier, on November 7, 1989, Leonardo S. Doctor, Chief of the Law Division

of the Bureau of Customs, issued a Memorandum[12] informing the Chief for
Auction and Cargo Disposal Division that the declaration of abandonment in
the aforestated proceedings had already become final and executory as of
October 30, 1989 and that the cargoes subject matter thereof should be
inventoried and sold at public auction.

However, before the inventory and sale at public auction of the goods could
be accomplished, part of the warehouse containing the shipment was burned

on July 26, 1990. The private respondents shipment was, likewise, burned
and destroyed. The Philfire paid to the private respondent the amount of
P12,000,000, for which the latter was issued a receipt.

On March 19, 1991, the private respondent, through counsel, sent a letter to
the petitioner demanding payment of the value of the goods in the amount of
US$32,006.93. However, the petitioner rejected the demands. Meanwhile,
on October 28, 1991, the petitioner executed a Release of Claim and Hold
Harmless Undertaking.[13]

On December 26, 1991, or after the lapse of more than two years from the
arrival of the cargo in the Philippines, the private respondent filed a complaint
for damages before the RTC of Pasig City, Branch 154, against the petitioner.
The private respondent alleged, inter alia, that its goods were stored in the
petitioners bonded warehouse due to the problem it encountered at the
Bureau of Customs; that the goods were gutted by fire on July 26, 1990 while
stored in said bonded warehouse; and, despite demands for the release of
the goods, the petitioner refused to release the same. The private respondent
prayed that the petitioner and Philfire be held jointly and severally liable to
pay the following:

a)
the sum of US$32,006.93 or its peso equivalent computed based on the
rate of exchange prevailing at the time of payment with interest thereon from
the time of the filing of complaint up to the time of actual payment;

b)

the sum of P30,000.00 as and for attorneys fees;

c)

the costs of suit;[14]

In its answer, the petitioner interposed special and affirmative defenses.

Aside from alleging that there was no privity of contract between it and the
private respondent, the petitioner also alleged that the private respondent
lost the right of action against it as it was not the real party-in-interest in the
case. The petitioner averred that the goods in question were received not
from the private respondent but from the Bureau of Customs, under Customs
Administrative Order No. 102-88 dated August 30, 1988, covering Forfeited

Cargoes (FC), Abandoned Cargoes (AC) and Cargoes held under

Warrant/Seizure and Detention (CWSD). According to the petitioner, before
the subject cargo was destroyed by accidental fire, the private respondent
had violated the Tariff and Customs Code and related laws, rules and
regulations, and failed to pay the corresponding taxes, duties and penalties
for the importation. Furthermore, the private respondent failed to make the
corresponding claim for the release of the said cargo, until the same was
declared as overstaying cargo, and later as abandoned cargo. The
petitioner further asserted that the government, and not the private
respondent, was the owner thereof. As such, the private respondent was not
entitled to the insurance proceeds arising out of the fire policy covering the
petitioner as a customs bonded warehouse. Furthermore, considering that
the cause of the loss of the subject cargo was a fortuitous event, an act of
God, and the petitioner, having exercised the required due care under the
circumstances, cannot be held legally liable for such loss. Finally, the
petitioner alleged that its warehouse is legally considered as an extension of
the Bureau of Customs and all goods transferred therein continue to be in
the custody of the Bureau of Customs, with all its legal implications.[15]

Defendant Philfire, for its part, filed a motion to dismiss[16] on the ground
that it had no contractual obligation to the private respondent; hence, the
latter had no cause of action against it. The trial court deferred the resolution
of the said motion[17] until the grounds appeared to be indubitable. In its
answer,[18] Philfire alleged that there was no privity of contract between it
and the private respondent, considering that the petitioner was the insured
party. Furthermore, the private respondent had no insurable interest in the
goods that were burned in the petitioners warehouse. Finally, Philfire alleged
that the obligation sought to be enforced by the private respondent had
already been settled when it paid its obligation under the insurance
policy[19] as shown in the Release of Claim and Hold Harmless Undertaking
dated October 28, 1991, executed and signed for and in behalf of the
petitioner by its Vice- President, Mr. Cesar D. Catalan.

The private respondent filed its pre-trial brief proposing that the following
issues to be litigated by the parties and resolved by the Court:

1.

Corporate personality of the plaintiff;

2.
Value of plaintiffs goods stored in R.V. Marzans warehouse and which
were destroyed by fire;

3.
Whether or not at the time of the fire on July 26, 1990. plaintiffs goods
were already abandoned goods so that the plaintiff, at the time of the fire,
was no longer the owner of the said goods.

4.

Attorneys fees and damages;[20]

However, the trial court did not issue a pre-trial order.

During the trial, the petitioner presented Atty. Leonardo S. Doctor, the Law
Division Chief of the Bureau of Customs, as one of its witnesses to prove that
the cargo had already been declared by the District Collector of Customs as
abandoned cargo in Abandonment Proceedings No. 288-89, and that the
cargo was destroyed by fire before it could be sold at public auction.

Thereafter, the private respondent filed its memorandum stating, inter alia,
that it did not abandon the goods because it did not receive the notice of
abandonment of the cargo from the Bureau of Customs. The petitioner
insisted that upon the abandonment of the cargo under Section 1802 of the
Tariff and Customs Code of the Philippines (TCCP), it became, ipso facto, the
property of the government; hence, the private respondent had no right to
claim the value of the shipment.

After trial, the court rendered judgment, the decretal portion of which reads:

WHEREFORE, foregoing premises considered, defendant RV Marzan is held

solely liable for the loss suffered by the plaintiff and is hereby ordered to pay
the plaintiff the following:

1.
The sum of US$32,006.93 or its peso equivalent computed on the
rate of exchange prevailing at the time of payment with 6% interest thereon

from the time of filing of complaint up to the time of actual payment;

2.

The sum of P30,000.00 as and for attorneys fees; and

3.

Costs of suit.

The complaint against Philfire, the counterclaim against Shielas and the
cross-claim against R.V. Marzan, are hereby dismissed.[21]

According to the trial court, the Bureau of Customs subsequent declaration

that the subject shipment was abandoned cargo was ineffective, as the
private respondent was not sent a copy of the September 29, 1989 Notice as
required by Sec. 1801 of the Tariff and Customs Code. Under the law, notice
of the proceedings of abandonment should be given to the private
respondent as the consignee or its agent, to enable it to adduce evidence at
a public hearing, conformably to the requirement of due process. Since the
private respondent was never notified of the abandonment proceedings, it
cannot, thus, be said that it impliedly abandoned the shipment and lost its
ownership over the same in favor of the government.

The trial court rejected the petitioners claim that it could not be held liable
for the private respondents loss because the fire that destroyed the subject
cargo was an act of God. According to the trial court, this is precisely one of
the reasons why a bonded warehouse is required by law to insure the goods
received and stored against fire; otherwise, persons dealing with a bonded
warehouse would not be afforded due protection. According to the court, the
policy procured by the petitioner inures equally and proportionately to the
benefit of all the owners of the property insured, even if the owner of the
goods did not request or know of the insurance. Citing Section 1902 of the
Tariff and Customs Code, the trial court pointed out that the petitioners
bonded warehouse is considered as an extension of the Bureau of Customs
only insofar as it continues with the storage and safekeeping of goods
transferred to it by the latter.

Finally, the trial court ruled that the private respondent had no cause of
action against the insurer Philfire, as it was not a party to the insurance

contract between the petitioner and Philfire. Since the terms of the insurance
contract do not confer a benefit upon a third person as required by Article
1311 of the Civil Code, the private respondent had no right to the insurance
proceeds.

The petitioner appealed the decision to the Court of Appeals, docketed as CAG.R. CV No. 49905, and assigned the following errors:

THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT

FOR LACK OF A VALID CAUSE OF ACTION AND IN HOLDING THE DEFENDANT
MARZAN LIABLE FOR THE LOSS SUFFERED BY PLAINTIFF IN SPITE OF THE
FACT THAT, LONG BEFORE THE FIRE OF JULY 26, 1990, WHICH GUTTED
DEFENDANTS WAREHOUSE, THE PLAINTIFFS SHIPMENT HAS ALREADY BEEN
DECLARED ABANDONED BY FINAL ORDER OF THE BUREAU OF CUSTOMS.

II

THE TRIAL COURT ERRED IN AWARDING ATTORNEYS FEE[S] OF

P30,000.00.[22]

The petitioner asserted that the private respondent renounced its interests
over the cargo by its continued failure and refusal, despite notice to it, to
claim the cargo and pay the corresponding duties and taxes. It disclaimed
liability on the following grounds:

1.
That contrary to the plaintiffs submission, it was not exempt from the
payment of customs duties and taxes and hence, required to file entry within
five (5) days from arrival of the shipment as provided for under 1801 of the
Tariff and Customs Code;

2.
The subject shipment was declared abandoned by the Bureau of
Customs due to the failure of the plaintiff-consignee to claim the same within
the 15-day reglementary period from the date of posting of the notice to
claim as provided in Section 1801(b) of Republic Act No. 7651; and,

3.

The abandonment of the cargo was already declared final as of October

30, 1989 in the abandonment proceedings conducted by the Bureau of

Customs, and, hence the plaintiffs shipment ipso facto became the property
of the government pursuant to Section 1802 of the same Act.

4.
It was only on January 6, 1992, that plaintiff filed the present complaint
against the defendant or more than two years after the declaration of
abandonment of subject shipment became final and executory.[23]

Anent the award of attorneys fees in favor of the private respondent, the
petitioner averred that, as there was no finding of malice or bad faith in its
refusal to pay the private respondent, there was no factual basis for the
award.

In its brief, the private respondent contended that, as found by the trial court,
there was no valid and effective abandonment over the subject goods. It was
also pointed out that if the petitioners claim that the subject goods belonging
to the private respondent had been declared abandoned cargo and the same
had become government property, then the government, through the Bureau
of Customs, should have intervened in the case, considering the private
respondents vigorous stance in denying it had ever abandoned its goods.
Despite the fact that the Bureau of Customs was clearly apprised of the case
when the petitioner presented Atty. Doctor as its witness, there was no such
attempt from the government to intervene and claim ownership over the
cargo. The private respondent also pointed out that the petitioners refusal to
satisfy a valid, just and demandable claim had compelled it to litigate and
incur expenses to protect its interest. The petitioners refusal to satisfy the
private respondents claim was in furtherance of an intention to unjustly
enrich itself, and was evidence of the latters gross and evident bad faith.

The Court of Appeals upheld the trial courts ruling in its Decision dated
January 31, 1997. The appellate court held that the District Collector of
Customs failed to give due notice of the abandonment proceedings to the
private respondent, and that the same constituted denial of due process of
law. Although notice of the declaration of abandonment was posted on the
Bureau of Customs bulletin board, the same was insufficient; such notice
would be proper only in cases where the owner or importer is unknown,
pursuant to Section 2304 of the Tariff and Customs Code. The appellate court
averred that the private respondent is duly registered with the Garment and

Textile Export Board and with the Bureau of Customs as Garments

Manufacturer and Exporter; as such, the Bureau of Customs knew or should
have known the address of the private respondent and should have sent the
required notice to it at said address. For the Collector of Customs failure to
duly notify the private respondent, the goods in question cannot be
considered as impliedly abandoned cargo.

The decretal portion of the decision of the Court of Appeals reads, thus:

WHEREFORE, the appealed decision in Civil Case No. 61644 is hereby

AFFIRMED by this Court, with costs against defendant-appellant.[24]

The petitioner assails the decision of the Court of Appeals contending that:

The Court of Appeals erred in failing to consider the fact that the Regional
Trial Court did not have jurisdiction over the central issue of the case.

II

The Court of Appeals erred in not dismissing the Respondents Complaint

outright for lack of cause of action.[25]

The petitioner asserts that the private respondent had a cause of action
against it for the value of the shipment only if the latter was still the owner of
the shipment when it was gutted by fire on July 26, 1990. The ultimate issues
were as follows: whether the private respondent had impliedly abandoned the
cargo and whether the declaration of abandonment made by the Chief of the
Law Division of the Bureau of Customs in the abandonment proceedings had
become final and executory. However, according to the petitioner, the
resolution of such issues is within the exclusive jurisdiction of the District
Collector of Customs, and within the appellate jurisdiction of the Court of Tax

Appeals. Thus, the RTC had no jurisdiction to delve into and resolve the issue
of whether or not the private respondent was duly served with a copy of the
notice of the abandonment proceedings and to pass upon the validity of the
abandonment proceedings itself. The petitioner asserts that the Bureau of
Customs has exclusive and original jurisdiction to hear and decide cases
concerning the implementation of Customs Laws or any other law that the
Bureau is charged to implement. Even if there was a violation of due process
in the seizure and forfeiture case, the Bureau retained jurisdiction over the
same, to the exclusion of the regular courts. According to the petitioner, it
behooved the RTC to dismiss the complaint of the private respondent for lack
of jurisdiction, without prejudice to the latters right to appeal the notice of
abandonment to the Commissioner of Customs, and, from an adverse ruling
of the Commissioner of Customs, to the Court of Tax Appeals.

In its Comment, the private respondent avers that the petitioner raised for
the first time only in this Court the issue of the trial courts jurisdiction, as
well as the matter of its failure to appeal from the declaration of
abandonment of the District Collector of Customs with the Commissioner of
Customs. The private respondent never raised the issue in its pleading in the
RTC and in the CA. Thus, the petitioner is barred by laches from raising such
issue in this case. The private respondent asserts that the petitioners motive
is clearly to assail the factual findings of the trial court as affirmed by the CA
and introduce new matters in the case. According to the private respondent,
this runs counter to established jurisprudence that the Supreme Court is not a
trier of facts.

The private respondent also asserts that the RTC did not pass upon the
validity or invalidity of the administrative proceedings before the Collector of
Customs, but merely applied the law, particularly the last sentence of Sec.
1801 of the Tariff and Customs Code. Contrary to the private respondents
contention, the trial court had jurisdiction over its action. As admitted by the
petitioners witness, Atty. Leonardo Doctor, the private respondent was not
furnished a notice giving it fifteen days to file the appropriate import entry
documents. Hence, the private respondent was not deemed to have
abandoned the cargo. The private respondent also posits that considering
that actions of the Collector of Customs are reviewable to the Court of Tax
Appeals, which are, in turn, ultimately reviewable by the Court of Appeals, the
latter court, to which the petitioners appeal had eventually found its way,
would therefore be fully competent to pass upon the validity of the
abandonment proceedings. Furthermore, according to the private
respondent, an appeal of the abandonment proceedings before the District

Collector of Customs would be a futile exercise as the goods had already

been burned and destroyed. The private respondent further posits that if,
indeed, the goods had been abandoned by the private respondent and
became the property of the government, as averred by the petitioner, the
Bureau of Customs should have intervened in the case, pursuant to Sec. 1,
Rule 19 of the 1997 Rules of Civil Procedure. The fact that the government
did not intervene gives rise to doubts as to the petitioners claim that the
subject goods had been declared abandoned by the Bureau of Customs and,
thus, became the property of the government. Finally, the private
respondent argued, the Bureau of Customs lost jurisdiction over the cargo
when it was gutted by fire before the sale at public auction.

In its reply, the petitioner insists that the defense of lack of jurisdiction may
be interposed at any time, during appeal or even after final judgment,
conformably to the previous rulings of the Court.

THE ISSUE

The core issue raised by the petitioner for resolution in this case is whether or
not the trial court had jurisdiction to review and declare ineffective the
declaration of the District Collector of Customs in Abandonment Proceedings
No. 288-89 that the subject shipment was abandoned cargo and that,
thenceforth, the government ipso facto became the owner thereof.

We uphold the contention of the petitioner. Irrefragably, the RTC had

jurisdiction over the nature of the private respondents action, which was one
for the collection of the value of the cargo gutted by fire, while under the
custody and control of the petitioner preparatory to its sale at public auction
by the Bureau of Customs. The jurisdiction of the court or other tribunal is
determined by the relevant allegations of the complaint and the character of
the relief sought, irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims accorded therein. The jurisdiction of
the trial court does not depend upon the defenses in the answer or in a
motion to dismiss.[26] However, the jurisdiction of the court or tribunal over
the issues, as gleaned from the pleadings of the parties, is determined by the
law which is determinative and decisive of said issue.

As gleaned from the pleadings of the parties in the trial court, the core issue
therein was whether or not the private respondent was the owner of the
cargo when it was gutted by fire, as claimed by the private respondent, or
owned by the government after it was declared by the District Collector of
Customs as abandoned cargo, as claimed by the petitioner. Indeed, the
private respondent, in its pre-trial brief, listed this as one of the issues to be
resolved by the Court, thus:

1.
Whether or not at the time of the fire on July 26, 1990. plaintiffs goods
were already abandoned goods so that the plaintiff, at the time of the fire,
was no longer the owner of said goods.[27]

If the government owned the cargo before it was gutted by fire, then the
private respondent had no cause of action against the petitioner. But the
resolution of the issue is riveted to and intertwined with the resolution of the
issue of whether the RTC is vested with jurisdiction to review and nullify a
declaration made by the District Collector of Customs that the shipment was
abandoned cargo and, thus, ipso facto belonged to the government. The
resolution of both issues involved the application of Section 1801 and Section
1802 of the Tariff and Customs Code, which read:

SEC. 1801. Abandonment, Kinds and Effects of. Abandonment is expressed

when it is made direct to the Collector by the interested party in writing, and
is implied when, from the action or omission of the interested party to file the
import entry within five (5) days or an extension thereof from the discharge
of the vessel or aircraft, or having filed such entry, the interested party fails
to claim his importation within five (5) days thereafter or within an extension
of not more than five (5) days shall be deemed an implied abandonment. An
implied abandonment shall not be effective until the article shall be declared
by the Collector to have been abandoned after notice thereof is given to the
interested party as in seizure cases.

Any person who abandons an article or who fails to claim his importation as
provided for in the preceding paragraph shall be deemed to have renounced
all his interests and property rights therein.

SEC. 1802. Abandonment of Imported Articles.- The owner or importer of any

articles may, within ten days after filing of the import entry, abandon to the
Government all or a part of the articles included in an invoice, and,
thereupon, he shall be relieved from the payment of duties, taxes and all
other charges and expenses due thereon: Provided, That the portion so
abandoned is not less than ten per cent of the total invoice and is not less
than one package, except in cases of articles imported for personal or family
use. The articles so abandoned shall be delivered by the owner or importer
at such place within the port of arrival as the Collector shall designate, and
upon his failure to so comply, the owner or importer shall be liable for all
expenses that may be incurred in connection with the disposition of the
articles.

Nothing in this section shall be construed as relieving such owner or importer

from any criminal liability which may arise from any violation of law
committed in connection with the importation of the abandoned article.

The resolution of the issue also calls for the application of Section 2601 of the
said Code which provides that the property in customs custody, including
abandoned articles, shall be subject to sale under the conditions provided
therein. Indeed, the trial court resolved the issues under Section 1801 of the
Tariff and Customs Code and found the petitioner liable to the private
respondent, under Section 1902[28] of the said Code.

The trial court held ineffective the declaration made by the District Collector
of Customs that the cargo was abandoned because the notice to the
consignee as mandated by Section 1801 of the Code was not complied with.
Thus, according to the trial court, the private respondent owned the cargo
and had a cause of action against the petitioner:

In trying to avoid liability, RV Marzan admits that the plaintiff was the
consignee of the cargo upon its arrival in the Philippines. However, RV
Marzan avers that at the time of the fire, the goods were already the property

of the government. Before the fire, RV Marzan received the cargo from the
Bureau of Customs pursuant to a Memorandum Order declaring it as
abandoned cargo. This Memorandum Order which is in accordance with
Sec. 1801 of the Tariff and Customs Code, provides as follows:

An examination of the records reveal that the subject shipment was

subsequently declared abandoned by the Bureau of Customs as abandoned
cargo for the plaintiffs failure to file the import entry.

This declaration is found by the Court to be ineffective. Under the law, notice
of the proceedings of abandonment was not given to the consignee or the
plaintiff herein or his agent. The consignee in this case being known, should
have been notified of the abandonment of his property in favor of the
government and that he should have been given a chance at a public hearing
to present evidence and to be heard with respect to the cargo subject of
abandonment. This is part of due process.[29]

Evidently, the resolution of the foregoing issues is within the exclusive

competence of the District Collector of Customs, the Commissioner of
Customs and within the appellate jurisdiction of the Court of Tax Appeals.
Indeed, in Alemars, Inc. v. Court of Appeals,[30] we held that:

Petitioner primarily seeks the annulment of the act of the Collector of

Customs declaring the subject importation abandoned and ordering it sold at
public auction, claiming that the abandonment proceeding held by the
Collector of Customs was irregular since the latter did not give notice to
petitioner of the abandonment before declaring the importation abandoned.

Consequently, the case falls within the jurisdiction of the Commissioner of

Customs and the Court of Tax Appeals vis--vis the averments in the
amended petition, not with the regional trial court.

In Jao v. Court of Appeals,[31] we held that the RTC is devoid of any

competence to pass upon the validity or regularity of seizure and forfeiture
proceedings conducted by the Bureau of Customs, and to enjoin or otherwise
interfere with the said proceedings even if the seizure was illegal. Such act
does not deprive the Bureau of Customs of jurisdiction thereon. Thus, we
held:

There is no question that Regional Trial Courts are devoid of any competence
to pass upon the validity or regularity of seizure and forfeiture proceedings
conducted by the Bureau of Customs and to enjoin or otherwise interfere with
these proceedings. The Collector of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all questions
touching on the seizure and forfeiture of dutiable goods. The Regional Trial
Courts are precluded from assuming cognizance over such matters even
through petitions of certiorari, prohibition or mandamus.

It is likewise well-settled that the provisions of the Tariff and Customs Code
and that of Republic Act No. 1125, as amended, otherwise known as An Act
Creating the Court of Tax Appeals, specify the proper fora and procedure for
the ventilation of any legal objections or issues raised concerning these
proceedings. Thus, actions of the Collector of Customs are appealable to the
Commissioner of Customs, whose decision, in turn, is subject to the exclusive
appellate jurisdiction of the Court of Tax Appeals and from there to the Court
of Appeals.

The rule that Regional Trial Courts have no review powers over such
proceedings is anchored upon the policy of placing no unnecessary hindrance
on the governments drive, not only to prevent smuggling and other frauds
upon Customs, but more importantly, to render effective and efficient the
collection of import and export duties due the State, which enables the
government to carry out the functions it has been instituted to perform.

Even if the seizure by the Collector of Customs were illegal, which has yet to
be proven, we have said that such act does not deprive the Bureau of
Customs of jurisdiction thereon.

Respondents assert that respondent Judge could entertain the replevin suit

as the seizure is illegal, allegedly because the warrant issued is invalid and
the seizing officer likewise was devoid of authority. This is to lose sight of the
distinction between the existence of the power and the regularity of the
proceeding taken under it. The governmental agency concerned, the Bureau
of Customs, is vested with exclusive authority. Even if it be assumed that in
the exercise of such exclusive competence a taint of illegality may be
correctly imputed, the most that can be said is that under certain
circumstances the grave abuse of discretion conferred may oust it of such
jurisdiction. It does not mean, however, that correspondingly a court of first
instance is vested with competence when clearly in the light of the decisions
the law has not seen fit to do so.

The allegations of petitioners regarding the propriety of the seizure should

properly be ventilated before the Collector of Customs. We have had
occasion to declare:

The Collector of Customs when sitting in forfeiture proceedings constitutes a

tribunal expressly vested by law with jurisdiction to hear and determine the
subject matter of such proceedings without any interference from the Court
of First Instance (Auyong Hian v. Court of Tax Appeals, et al., 19 SCRA 10).
The Collector of Customs of Sual-Dagupan in Seizure Identification No. 14-F72 constituted itself as a tribunal to hear and determine among other things,
the question of whether or not the M/V Lucky Star I was seized within the
territorial waters of the Philippines. If the private respondents believe that
the seizure was made outside the territorial jurisdiction of the Philippines, it
should raise the same as a defense before the Collector of Customs and if not
satisfied, follow the correct appellate procedures. A separate action before
the Court of First Instance is not the remedy.

The trial court was incompetent to pass upon and nullify (1) the seizure of the
cargo in the abandonment proceedings, and (2) the declaration made by the
District Collector of Customs that the cargo was abandoned and ipso facto
owned by the government. It, likewise, had no jurisdiction to resolve the
issue of whether or not the private respondent was the owner of the cargo
before it was gutted by fire. The trial court should have rendered judgment
dismissing the complaint, without prejudice to the right of the private
respondent to ventilate the issue before the Commissioner of Customs and/or
to the Court of Tax Appeals as provided for in the Tariff and Customs Code.

The District Collector of Customs did not lose jurisdiction over the
abandonment proceedings. The loss of the cargo did not extinguish his
incipient jurisdiction in the said proceedings, nor render functus officio her
declaration that the subject shipment had been abandoned.

The private respondent cannot argue that if its complaint against the
petitioner is dismissed, the latter would be enriching itself at the expense of
the private respondent. In point of fact, the petitioner is liable to the
government for the duties and taxes due for the imported cargo under
Section 1902 of the Tariff and Customs Code, which reads:

SEC. 1902. Responsibility of Operators. The operators of bonded warehouse

in case of loss of the imported articles stored shall be liable for the payment
of duties and taxes due thereon.

The government assumes no legal responsibility in (sic) respect to the

safekeeping of articles stored in any customs warehouses, sheds, yards or
premises.

Neither may the private respondent invoke estoppel, because the parties, in
their pleadings in the trial court and in the Court of Appeals, raised the same
issues for resolution.

It must be stressed that the cargo arrived in the Philippines on April 12, 1989.
The private respondent failed to accomplish the required import entry
declarations, pay the requisite taxes and duties, if any, and take delivery of
the cargo. It was only after the lapse of more than two years, or on
December 21, 1991, that the private respondent filed its complaint against
the petitioner in the RTC. By then, the cargo had been gutted by fire. The
private respondent has not made any valid justification for its silence thereon
and its inaction. In can be said then that the private respondent went to
court with unclean hands.

The refusal of the Bureau of Customs to intervene in the trial court does not,
in any way, fortify the private respondents claim that it is the owner of the
cargo. The government had no legal obligation to intervene in the trial court

considering that the latter had no jurisdiction over the complaint. It was
enough that then Bureau of Customs Law Division Chief Atty. Doctor testified
that the cargo was duly declared by the District Collector of Customs as
abandoned property, that the said declaration had become final, and that the
government became ipso facto the owner of the cargo. The government had
every right to expect that the trial court would dismiss the complaint for lack
of jurisdiction over the issue raised therein.

IN THE LIGHT OF THE FOREGOING, the petition is GRANTED. The Decisions of

the RTC and of the Court of Appeals are SET ASIDE and REVERSED. The RTC
is ORDERED to dismiss the complaint of the private respondent against the
petitioner, as well as the counterclaim of the latter against the private
respondent.

SO ORDERED.

Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.

Puno, (Chairman), J., on leave.